Chong Yen Li v Tan Fee Ling & 2 Lagi (WA-24NCC-336-08/2016)

TAN FEE LING 35 (No. K/P: 640913-06-5323)

WONG LEE LIN (No. K/P: 690514-12-5541)

CHIN VUI KHEN … DEFENDAN- (No. K/P: 610819-12-5195) DEFENDAN 40 2 5 GROUNDS OF DECISION [1] Vide an Originating Summons dated 11/8/2016 (encl.2) made pursuant to s.150 of the Companies Act 1965 (‘CA 1965’) the Plaintiff seeks, among others, for the following reliefs against the Defendants:

An order that an extraordinary general meeting (‘EGM’) of Eureka Mining Sdn. Bhd. (‘EMSB’) shall be held at B3-U6-05, Solaris Dutamas, No. 1, Jalan Dutamas 1, Kuala Lumpur on 16/8/2016 at 10.00am and notice of the same agenda shall be posted to all shareholders of EMSB by the Applicant;

That the attendance of any of the following shareholders shall be sufficient quorum for the EGM:

Chong Yen Li

(ii) Tan Fee Ling

(iii) Wong Lee Hin 20

(iv) Chin Vui Khen

The EGM so conveyed by this order may transact any other incidental business of EMSB;

Each shareholder shall be entitled to the number of votes as per the number of shares held in EMSB;

The Applicant shall chair EGM if more than 1 shareholder is present at the EGM. Brief facts

Undisputed 30 EMSB is a company incorporated in Malaysia under CA 1965 and having its registered address at M5C/6, Jalan Pandan Indah 4/1A, Pandan Indah, 55100 Kuala Lumpur. Its nature of business is iron 3 mining. The authorised capital of the said company is RM5,000,000.00 5 and the paid up capital is RM1,000,000.00 at RM1.00 per share. [2] The Plaintiff, Chong Yen Li is the sister in law of D1, Tan Fee Ling, whose brother is Tan Chong Ling, the Plaintiff’s husband. 10 [3] EMSB has 2 directors, the Plaintiff and D1. In 2014, Tan Chong Ling, Plaintiff’s husband was in the ill-fated Malaysia Airlines flight MH370. Since the incident, in the words of D1, D2 and D3, D1 was “instrumental in running the Company [EMSB]” whilst the Plaintiff described it as “[D1] was managing the said company [EMSB]”. 15 [4] At the material time (24/6/2008), date of incorporation of EMSB, Wong Mun Fui was the company secretary of the said Company.

(ii) Disputed 20 [5] In terms of ownership of the shares in EMSB, based on the companies search of Companies Commission of Malaysia (exh.C-1, Plaintiff’s Affidavit in Support affirmed on 28/7/2016) (‘PAIS’), the Plaintiff averred the ownership of the shares in EMSB are -

Plaintiff - 600,000 ordinary shares;

D1 - 200,000 ordinary shares;

D2 - 150,000 ordinary shares; and

D3 - 50,000 ordinary shares. [6] D1, D2 and D3 averred that EMSB was set up by Tan Chong 30 Ling, D1, D2 and D3 in 2008. The actual allocation of shares in EMSB are -

Tan Chong Ling (Plaintiff’s husband) - 600,000 ordinary shares; 4

D1 - 200,000 ordinary shares;

D2 - 150,000 ordinary shares; and

D3 - 50,000 ordinary shares. [6.1] D1, D2 and D3 further averred that during the incorporation of EMSB, Tan Chong Ling being the majority shareholder had an ongoing legal suit in Singapore with BNP Paribas, a bank incorporated in 10 France for recovery of USD$1,489,354,75 (‘Singapore Suit’) dated 1/9/2003 which was settled vide a Settlement Agreement dated 8/11/2011 between BNP Paribas (Creditor) and Tan Chong Ling and Tan Jing San (Debtors); and Tan Chong Ling decided to register the Plaintiff (his wife) to hold the shares on his behalf pending the outcome 15 of the Singapore Suit (see exh.TFL-1, D1’s Affidavit in Reply affirmed on 23/11/2016) (‘D1’s AIR’). [6.2] All the shareholders except the Plaintiff have active participation in EMSB: apart from being one of the cheque signatory, the Plaintiff is only a sleeping partner. 20 [7] The Plaintiff denied the matters in para 6, 6.1, 6.2 putting the Plaintiff to strict proof and averred that she was made aware of the management of EMSB through her late husband. 25 Contentions of Parties [8] The Plaintiff’s contentions may be summarised as follows: [8.1] The Memorandum & Articles of Association extracted from CCM on 10/5/2016 is incomplete. The Company Secretary explained that when companies adopt Fourth Schedule Table A, CA 1965, only the 30 Memorandum of Articles of Association (M&A) and the signing page of the subscribers will be available. The rest will be adopted from the Fourth Schedule. 5 [8.2] The Plaintiff and/or Plaintiff’s solicitors had on 4 occasions issued 5 letters requesting the Company Secretary to call an EGM but unfortunately no EGM was called. The 4 letters are dated -

24/2/2016 - the Plaintiff issued to the Company Secretary to call for EGM (exh.C-3, PAIS).

(ii) 18/4/2016 - the Plaintiff issued to D1 (not to Company Secretary 10 directly as the Plaintiff submitted) and carbon copied to the Company Secretary pursuant to s.144 CA 1965 to call for EGM to consider and approve the proposed resolutions as per Annexure A to the said letter (exh.C-4, PAIS) as follows: “1. A resolution that the company secretary Wong Mun Fui be removed 15 forthwith as the Company Secretary and Ng Say Or (NRIC No.531118-10-6103) of 6, Solok Pegaga Satu, Off Jalan Pegaga, Taman Chi Liung, 41200 Klang, Selangor Darul Ehsan be appointed as the Company Secretary. 20 2. A resolution appointing Chong Mee Fah @ Frederick Chong (NRIC No. 530818-12-5407) as additional Director Cum Managing Director of the company with immediate effect.

A resolution relieving Tan Fee Ling of all his duties as Director of the 25 company with immediate effect.

A resolution appointing Chong Mee Fah @ Frederick Chong (NRIC No. 530818-12-5407) and Chong Yen Li (NRIC No. 661108-12- 5074) to be the signatories of all bank accounts of the Company with 30 immediate effect replacing the former signatories.

A resolution that all cheque books to the company’s bank account which is current shall be cancelled and annulled and new cheque books be issued to the new signatories, Chong Mee Fah @ 35 Frederick Chong (NRIC No. 530818-12-5407) and Chong Yen Li (NRIC No. 661108-12-5074).

A resolution that Chong Yen Li (NRIC No. 661108-12-5074) and Chong Mee Fah @ Frederick Chong (NRIC No. 530818-12-5407) 40 shall be given immediate access to all corporate information, income statements and accounts of the Company by Tan Fee Ling, his servants or agents with immediate effect.

A resolution that the entire and complete management of the 5 company shall be in the control of Mr. Chong Mee Fah @ Frederick Chong (NRIC No. 530818-12-5407).

A resolution that Mr. Chong Mee Fah @ Frederick Chong (NRIC No. 530818-12-5407) is hereby given irrevocable powers and authority 10 to liquidate the assets of the company and any amount realized shall be term as profit and dividend in respect of the respective shareholders shall be declared without the sanction of AGM of the Company”. 15

(iii) 14/5/2016 - the Plaintiff issued to the Company Secretary to call for EGM (exh.C-5, PAIS).

(iv) 20/6/2016 - the Plaintiff’s solicitors, Messrs. Kalai & Partners issued a letter to the Company Secretary to issue a Notice of EGM within 7 days from the date of the letter, failing which the Plaintiff 20 shall move the Court under s.150 CA 1965 to obtain the relevant order to hold an EGM of EMSB and all costs and expenses shall be borne by the Company Secretary (exh.C-6, PAIS). [8.3] In addition, by letter dated 29/6/2016, the Company Secretary gave notice that the Company Secretary intended to vacate the office 25 with immediate effect from the date of the said letter (exh.C-7, PAIS). [8.4] Unless ordered by this Court, the EGM of EMSB will never be held and the business will be dormant as it is now. [9] The Defendants’ contentions may be summarised as follows: 30 D2 and D3 [9.1] The Plaintiff has never consulted D2 or D3 with regard to her intention to call for EGM. [9.2] This suit brought up by the Plaintiff is premature. D2 and D3 are also not privy to whatever proposed resolution which the Plaintiff wish 35 to compel the directors to call for the EGM. 7 [9.3] After consultation with other company secretaries, D2 believed 5 that the M & A is complete as it adopted the Fourth Schedule, Table A CA 1965. [9.4] The Plaintiff’s requisition of the EGM is not in accordance with the right procedure. Any requisition of EGM shall be written to the BOD. The director will inform the Company Secretary to call for the 10 meeting if it complied with the M & A of the CA 1965. Since the requisition was not done in a correct manner, no EGM has been called. [9.5] D2 or D3 did not receive the letter dated 29/6/2016. Nonetheless, it is the director’s duty to appoint the company secretary. 15 Therefore it is unnecessary to call for an EGM to involve the shareholder for the appointment of company secretary. [9.6] EGM can be called if proper procedure has been adhered to. [9.7] With regard to the quorum of the EGM, it is tantamount to not respecting the right of the other shareholders by assuming they will 20 never appear in the EGM. D1 [9.8] The Plaintiff has bypassed the provision of s.144 of the CA 1965 in making this application under s.150 of the CA. [9.9] This suit is premature. D1 is not privy to the proposed 25 resolutions. [9.10] The rest, D1 reiterated D2 & D3’s contentions. The Law [10] S.150 CA 1965 provides - 30 “Power of Court to order meeting If for any reason it is impracticable to call a meeting in any manner in which meetings may be called or to conduct the meeting in the manner prescribed by the articles or this Act the Court may, either of its own 8 motion or on the application of any director or of any member who would be 5 entitled to vote at the meeting or of the personal representative of any such member, order a meeting to be called, held and conducted in such manner as the Court thinks fit, and may give such ancillary or consequential directions as it thinks expedient, including a direction that one member present in person or by proxy shall be deemed to constitute a 10 meeting or that the personal representative of any deceased member may exercise all or any of the powers that the deceased member could have exercised if he were present at the meeting”. (Emphasis added) 15 [11] In Low Son Siang @ Loo Soon Siong v Lee Kim Yong [1999] 1 AMR 610 (HC) at p.611 Abdul Malik Ishak J (as he then was) held - “When confronted with an application made pursuant to s 150 of the Act, the first and foremost question for the court to pose is whether the desired EGM could be conducted. The onus would then be on the plaintiff to show 20 that it was impracticable to call for such a meeting of the company in any manner whatsoever or to conduct such a meeting in accordance with the company's articles of association”. The aforesaid decision was approved by the Court of Appeal in 25 Tamabina Sdn Bhd & Anor v Nakamichi Corporation Berhad [2016] MLJU 462) (a case common to all parties), at para 12. At para 23, Abdul Aziz bin Abdul Rahim JCA (delivering the judgment of the Court of Appeal) approved the same principles echoed in Chuah Sean Kin & Ors v Persatuan Kenel Anjing Malaysia & Anor [2009] 8 MLJ 30 453. [12] Further at para 22, the Court of Appeal in Tamabina Sdn Bhd (supra) held - “[22] We are inclined to agree with the above submission by the learned 35 counsel for the appellant. In our view, to show impracticability it is necessary to show evidence of attempts or efforts to call and hold a meeting and such attempts or effort have been futile. The reason for the futility in calling or holding a meeting must be attributed to some circumstances that make it almost impossible to hold the meeting. 40 These circumstances could be due to a deadlock situation, an intentional un-cooperative attitude of the directors, a persistent effort to derail the meeting or deliberate non-attendance at meeting after a 9 proper and valid notice had been issued so as to force the meeting to 5 be called off for want of quorum. The categories of such reasons are never closed. This evidence must be in the affidavit supporting the application under section 150 of the Companies Act, 1965. However lack of quorum per se is not sufficient to be evidence of impracticability of calling or holding a meeting. The lack of quorum due to absentia of the required 10 numbers of the board members must be adequately explained in the affidavit in support of the application”. (Emphasis added) 15 [13] Continuing at para 23(26), the Court of Appeal stated - “[26] Wynn-parry J in Re El Sombrero [1958] 3 All ER 1 in construing the scope of the English s. 135(1) which is similar to our s.150 observed that the word 'impracticable' in the section is more limited than the word 'impossible' and it appears that the question necessarily raised by the word 20 'impracticable' is for the court to examine the circumstances of the particular case and answer the question whether, as a practical matter, the desired meeting of the company can be convened, held and conducted. It was also observed in that case that on the face of the section 'there is no express limitation which would operate to give the words 'is impracticable' 25 any less meaning' than what has been stated earlier”. Findings [14] I find there is no conclusive evidence to show that the 600,000 30 shares held by the Plaintiff was due to her husband, Tan Chong Ling’s decision to transfer the same to her due to the Singapore Suit and to be held by her on his behalf. Neither is there any evidence indicating that the Plaintiff was made aware of the management of EMSB through her late husband. 35 [15] The Plaintiff submitted the Plaintiff has proved a case for the Court to exercise its discretion under s.150 CA 1965 in her favour in that it is impracticable to call a meeting of EMSB in the manner in which meeting of the said company may be called and conducted. The 40 Plaintiff argued that - 10

Under Article 79 of the Articles of Association of EMSB any 5 director may whenever he thinks fit convene an EGM and the EGM shall be convened on such requisition or on default may be convened by such requisitionist as provided by the CA 1965.

(ii) The Plaintiff had requisitioned for EGM premised on the 4 letters referred to in para 8.2 above but to no avail. Further the Company 10 Secretary did not act on the requisitions made before issuing the letter dated 29/6/2016 to the Director of EMSB giving notice of (i) her intention to vacate the office of company secretary with immediate effect from date of letter, (ii) the requirement to appoint a new company secretary within 1 month of her cessation from office in accordance 15 with s.139(1B) CA1965. [16] Article 79 of the M&A of EMSB reads - “79. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. A director 20 may at any time and the secretary shall on the requisition of a director summon a meeting of the directors”. [17] Article 44 of the M&A of EMSB reads - 25 “44. Any director may whenever he thinks fit convene an extraordinary general meeting, and extraordinary general meetings shall be convened on such requisition or in default may be convened by such requisitionists as provided by the Act”. 30 [18] It is quite clear from a plain reading of the aforesaid 2 provisions that Article 79 regulates the requisitioning by a director for a Board of Directors’ meeting whereupon the company secretary shall so 35 summon the same “for the dispatch of business” and is not the relevant Article. Whereas Article 44 provides for the requisitioning of 11 an EGM by a director whilst the procedure of convening of an EGM is 5 governed by s.144 CA 1965. [19] S.144 CA 1965 (relevant parts) provides as follows: “Section 144. Convening of extraordinary general meeting on 10 requisition

The directors of a company, notwithstanding anything in its articles, shall on the requisition of members holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital as at 15 the date of the deposit carries the right of voting at general meetings or, in the case of a company not having a share capital, of members representing not less than one-tenth of the total voting rights of all members having at that date a right to vote at general meetings, forthwith proceed duly to convene an extraordinary general meeting of the company to be held 20 as soon as practicable but in any case not later than two months after the receipt by the company of the requisition.

The requisition shall state the objects of the meeting and shall be signed by the requisitionists and deposited at the registered office of the 25 company, and may consist of several documents in like form each signed by one or more requisitionists”. (Emphasis added) [20] In so far as the 4 letters relied on by the Plaintiff as the basis of 30 a requisition for an EGM to justify that it was impracticable to call for such a meeting under s.150 CA 1965, I agreed with the submission of D1 and D2 and D3 that no EGM has been called because the Plaintiff has failed to follow the procedure under s.144 CA1965 for the requisition of an EGM. In my judgment I find the procedural defects 35 in the Plaintiff’s requisition of an EGM is best illustrated in the table drawn up by the learned Counsel for D2 & D3 as follows: 40 12 5 “ Exhibits Procedural Defect C-3

Did not state the objects of the meeting;

Requisition was not addressed to the board of directors but the company secretary and the address of which is not registered address of EMSB;

Not deposited at the registered office of EMSB;

No certificate of posting.

Not addressed to the board of directors, but to 1st defendant individually and not sent to EMSB’s business or registered address;

Not deposited at the registered office of the EMSB; and

No certificate of posting.

Requisition was not made to the board of directors; it was wrongly addressed to the company secretary.

Instead of the board of directors; it was wrongly issued to the company secretary. ” [20.1] On top of that even the letter, exh.C-6 prepared by Messrs. Kalai & Partners suffered the common procedural defect as letters sent by the Plaintiff herself in that it was wrongly addressed to the 10 Company Secretary and not the Board of Directors of EMSB and not carbon copied to the D1, D2 and D3 as Directors of EMSB but to the Plaintiff and one Frederick Chong who has no whatsoever capacity in EMSB. Based on item 5 of the proposed resolution annexed to the Plaintiff’s letter dated 18/4/2016, exh.C-4, Frederick Chong is 15 proposed as one of the new signatories together with the Plaintiff. 13 5 [21] Furthermore the old Company Secretary has given notice of intention to vacate office with immediate effect (29/6/2016) and brought also to the attention of the Board of Directors of EMSB to appoint a new company secretary within one month from 29/6/2016 (date of cessation of office) in accordance with s.139(1B) CA 1965 10 and the same has been addressed to the Board of Directors of EMSB. The said notice has been carbon copied to the Plaintiff and D1 (in their capacity as directors/shareholders), to D2 and D3 as shareholders and Messrs. Kalai & Partners as solicitors of the Plaintiff. Therefore it is incumbent for the Directors to appoint a new company secretary in 15 accordance with Article 95 read together with s.139(3) CA 1965 which read as follows: “95. The secretary shall in accordance with the Act be appointed by the directors for such term, at such remuneration, and upon such conditions as they may think fit; and any secretary so appointed may be removed by 20 them”; and “139(3) The secretary or secretaries shall be appointed by the directors and at least one of those secretaries shall be present at the registered office of the company by himself or his agent or clerk on the days and the 25 hours during which the registered office is to be accessible to the public”. [22] I find the submission of the Plaintiff that “from the objections made by the 1st, 2nd and 3rd Defendants in their respective Affidavits, it is abundantly clear that even if an EGM is ordered by this Court, the 30 quorum will not be met (quorum being 2 person) and therefore in the prayers we have requested the quorum for the EGM be restricted to 1 person” is misconceived. In my judgment, the Plaintiff is disregarding the rights of the other shareholders by assuming that they will never appear in the EGM when in the first place the Plaintiff has not proved 35 that D1 has intentionally refused to co-operate with the Plaintiff; neither 14 is there evidence from the Plaintiff that there is deliberate non 5 attendance at the EGM after a proper and valid notice had been issued so as to force the meeting to be called off for want of quorum. Conclusion [23] For the foregoing reasons I find the Plaintiff has failed to 10 discharge the onus of proving that it is impracticable to call or conduct a meeting under s.150 CA 1965 following the principles as enunciated in the authorities I have alluded to above. In fact I find the Plaintiff’s application is premature as it failed to exhaust all avenues as provided for in the EMSB’s Articles of Association i.e comply with the 15 requirements of s.144 CA 1965 for the convening of EGM on requisition by a director and after the resignation of the old Company Secretary, to appoint a new company secretary in accordance with Article 95 read together with s.139(3) CA 1965 and thereafter to comply with s.144 CA 1965 for the convening of EGM on requisition 20 by a director (see Kemunting Tin Dredging (M) Bhd. & Ors. v. Baharuddin Ma’arof & Ors. [1985] 1 CLJ 442 where Zakaria Yatim J (as he then was) held, the Court shall not intervene since there are two avenues open to the applicant to call for a general meeting under ss.144(3) and 145(1) CA 1965; the Court will only intervene under 25 s.150 if it is not practical for the applicant to call for a meeting either under the Articles of Association and under the relevant provision of the CA 1965). [24] In the circumstances I dismissed the Plaintiff’s application with 30 costs of RM4,000.00 each to be paid to D1 and to both D2 and D3. 15 5 Dated: 16/12/2017 SGD. (LAU BEE LAN) 10 Judge Counsel for the Plaintiff: Encik D. Kalaimany 15 Messrs Kalai & Partners Advocates & Solicitors No.14A-3, Tingkat 2, Jalan 14/20 Seksyen 14 46100 Petaling Jaya 20 Selangor Darul Ehsan Counsel for the 1st Defendant: 25 Encik Siva Ganish Sundrarajoo Messrs Markiman & Associates Advocates & Solicitors No. 19A, 1st Floor, Jalan Besar 41000 Klang 30 Selangor Darul Ehsan Counsel for the 2nd and 3rd Defendants: 35 Encik Alan Chua together with Cik Isabel Tan Messrs Alan Chua & Co Advocates & Solicitors 41-7, Block C, Jaya One 40 No. 72A, Jalan Universiti 46200 Petaling Jaya